East Africa Economic Report

A Tullow Rig in Paipai- Kenya DESPITE political talk to the contrary, it seems, Tanzania could end up with the short end of the stick in this project.  There is no clear, definable and quantifiable benefit for Tanzania, political rhetoric notwithstanding. The Tanzanian President was recently quoted as bragging that Tanzania will have three fuel pipelines including the Mtwara- Dar-es-salaam LNG pipeline, the Tanzania- Zambia white oils Pipeline and  now the Hoima- Tanga pipeline.   The cost-benefit analysis of the project does not support President Magufuli’s optimism.  However, Magufuli is ardent at jumping before looking. While the need and justification for the two pipelines is not hard to gauge, it is difficult to understand Tanzania’s stake in the third pipeline. She has no oil so far and the possibility of finding oil looks dim so far. What is the Oil pipeline for? Will she invest or risk tax payers’ money in that project? Can it be justified...

Magufuli: A bull in a China Shop?  It is rare for an elected government to become a stability risk for any country. However, in Tanzania, East Africa, the government, particularly the president is slowly assuming that dubious distinction .  This is a consequence of his disregard for due process and the rule of law in his governance style. It is becoming increasingly difficult to gauge the purpose of some of his actions for they appear to work against the country’s interests. Some actions even contradict the country’s economic and political goals. For instance, transferring government funds from private Commercial banks is reasonable if the government wants to spend the money and does not want to be tied down by investment contracts. However, it becomes a hurdle to economic activity if it is just parked at the Central Bank and the government begins to show a budget surplus because it did not spend the money.  Economic growth is driven by the flow of credit and...